Consider the following income statement for the United Supermarket that is currently levered. Its EBIT in 2020 is $400 and interest expense is $60 (but displayed as negative 60 in the income statement to indicate that it is an expense). The firm faces a tax rate of 30%.

Assume net income can be used to pay out to investors, the total amount available to pay out to all the investors (both equity holders and debt holders) is $______

The difference in dollars between (1) the total amount available to all investors (both equity holders and debt holders) and (2) the income that would be available to equity holders if the firm were not levered for the year 2020 is ____? (that is, what is (1) minus (2)? Note that we assume the operating performance is unchanged (so same EBIT) if the firm were not levered (i.e, financed with equity only).

Year 2020

EBIT $400 Interest

Expense -60 Earnings before tax

Taxes (rate = 30%)

Net income